3/18/2009 @ 1:42PM

Zucker On The Media

Faced with growing competition, a challenging advertising climate and the wrath of Daily Show host Jon Stewart, NBC Universal chief Jeff Zucker took the stage at the 2009 Media Summit in New York. The highlights:

On Jon Stewart’s anti-CNBC rant:

I thought it was incredibly unfair to CNBC and to the business media in general because I don’t think you can blame what’s happened here on the media. CNBC is a spectacular organization that has done a tremendous job covering the markets and the business world for 20 years–and probably distinguished itself more in the last two years than at any other point. Everyone wants to find a scapegoat right now. Everyone wants to point a finger … But to suggest that the business media or CNBC was responsible for what’s going on now is absurd.

On the sustainability of CNBC’s ratings:

Historically, when there’s been a lot of red on the screen people haven’t wanted to watch, and those times have led to periods of lesser ratings. That’s absolutely not the case this time. We’re seven months into the post-Lehman world, and the ratings continue to rise. I think that’s because this is not a down market, this is a change in the structure of investing and Wall Street. This is not just a momentary blip, so people are far more concerned and interested in the intersection of business, the economy and Wall Street.

On NBC Universal’s cable strategy:

People don’t understand how important cable is to our company. Sixty percent of our operating profits come from our cable networks. Every one of our cable networks had a record year last year from a ratings and a financial standpoint. And 2009, even in the midst of all of the difficulties we’re facing, is on target to be the same story.

On the Oxygen acquisition:

The thinking there was that we feel we do a very good job of running cable networks. Our margins are terrific. Our company has two incredible core competencies right now: running cable networks and news and information. Oxygen fit right into running cable networks, and also the suite of female assets that we have. We have an enterprise sell that we do now that we call Women at NBC Universal, so you can buy across properties if you want to just target women–and by that we mean Bravo, Oxygen, Today Show, Biggest Loser, iVillage. So Oxygen fit perfectly into that thinking.

On MSNBC’s transformation and sustainability:

The fact is the veiwership on MSNBC has remained incredibly strong. And on prime time, among adults 25 to 54, it now consistently beats CNN. That’s a nightly occurrence that’s continued through the new administration. So we don’t think we have to change that strategy or do anything differently. The fact is we’ve got some incredibly strong voices in Chris Matthews, Keith Olberman and Rachel Maddow that will sustain. We feel if we can add one more program to that lineup, which we’re activity looking for, it would really be another game changer for us.

On moving Jay Leno to prime time:

We’re all going through tremendous changes in our businesses … Look, newspapers didn’t ask the questions fast enough and weren’t willing to be honest enough with themselves. You can argue that Detroit didn’t ask those questions strongly enough or sincerely enough. My point is that we need to be honest about the change that’s going on in broadcasting. We could put our heads down and cross our fingers and wish this was 1987, but it’s not. Technology has changed everything; DVRs have changed the way people watch prime-time television; the Internet has changed the way people consume video; and advertising is not what it was. In our view, we have to think about the model.

Now, NBC in prime time has had a difficult last three or four years–sometimes you see the world more clearly when you’re flat on your back. It makes you step up and acknowledge what’s going on. When we look at broadcasting, we’re looking at the model and saying it’s been that way for 50 years, but does that mean it’s still the right model. In the environment we’re in, I think you have to question everything. You can’t say, ‘Just because that’s the way it’s been, we have to keep going that way.’

So we had this confluence of events at NBC in prime time. We believe in Conan [O'Brian,] and that’s why we were committed to Conan at The Tonight Show at 11:35. We wanted to keep both Jay and Conan. We wanted to have our cake and eat it too. So in that confluence of events, we looked at it and decided this was an attempt to keep Jay and change the model. I can tell you this is the third or fourth time in the last 30 years that NBC has looked at moving The Tonight Show format into prime time. This is the time that we decided to do it because technology and viewer habits have changed sufficiently so that it now made sense.

On his expectations for Leno:

This is not going to do the same ratings as the scripted dramas at 10 o’clock, so this is not a ratings play. I don’t think we’ll ever be able to say NBC is No. 1 in prime time because you can’t have the ratings we’re going to have at 10 o’clock. Now we still expect to do well, but we’re not going to do what the original prime-time dramas have done.

But what does being No. 1 in prime time mean anymore? We shouldn’t be measuring the people that watch The Office Thursday night at 9 o’clock by just the number of people that watch it Thursday night at 9 o’clock. … We’re in a whole new world, and we’ve got to rethink everything, and we’ve got to adjust.

On the appearance of proclaiming defeat:

We’re not proclaiming defeat. I don’t think anybody thinks Fox is any less of a network because they only program two hours a night. We’re not calling defeat at all. We’re questioning the model for today. Again, too many media organizations–particularly print and newspapers–weren’t willing to question the model. Nobody was willing to question the local television model. So we can bury our heads in the sand, and then I know we will be defeated. That’s the only sure way to declare defeat.

On the significance of ratings today:

I don’t want to say ratings don’t matter, because they do. But they are not the only gage of success. We’re in show business–and the show is important, and the business is important. It was easier to be in the show when the business was easier. But the business is a lot harder today.

Its kind of noteworthy that the last two networks that came in, Fox and the CW, came in with two hours a night. The networks that have been around for 50 years, CBS, ABC and NBC, have three hours a night because that’s the way we began. But what did Fox and the CW know in the last two decades that we didn’t know. Well, maybe the model wasn’t perfect anymore.

On the future of distribution:

We believe in ubiquitous distribution, and we want our content to be available, frankly, everywhere. We’re not interested in having people steal our content–we want to make it available … We are in periods of experimentation, and we’re not afraid to try things and then stop things. No risk, no reward. What we’re still in the process of is finding an economic system that supports that, and it’s still not there.

I think we’ve made progress … but what we’ve lost in terms of viewers and ad dollars on the traditional analog systems is not being made up for in any way–not even close–on the digital side. And until we’re able to do that, there’s a risk to all of our business plans. I think we’ll get there, but can we survive from here to there is the question. A lot of newspapers have no been able to survive; and a lot of local TV stations are having trouble surviving.

On his famous “analog dollars to digital pennies” commentary:

I think we’re at digital dimes now. We’ve made some progress, but there’s still a long way to go from those dimes to dollars. I don’t know that we’ll ever get to a one-for-one dollar replacement. But that’s OK if you can also fix your cost structure in the process. This is not just about revenue, its also about cost.

On his upfront expectations:

We have a huge suite of assets that go into the upfront, but I don’t think we’re handling it any differently [than we have in past years.]

We obviously know that we all go into this upfront at a more difficult economic time than we’ve had in a long time. We know that there’s a lot of uncertainty out there and that there’s frankly some paralysis on the part of some advertisers who aren’t sure where their budgets are going to be.

I expect it to move slowly. I expect that some of the broadcast networks may not move as much inventory this upfront season. I expect the cable upfront season, particularly our properties, to be very strong. But it really depends what shows up, and that’s a question of confidence in the marketplace.

On Jeffrey Immelt’s involvement:

He’s been an unbelievably strong champion of ours … By and large, the last two years we’ve delivered for him, so he’s given us the room to do what we think is right. Look, he doesn’t get involved in programming decisions, and he doesn’t get involved in editorial decisions. If there’s a major strategic decision that changes the nature of our company, we review it with him in our operating reviews that are a part of the normal rigor … I give him a heads up on things that I think are going to hit his radar.

On NBC’s future at GE:

I would say this: NBCU has benefited greatly from being part of GE. The discipline that’s been the hallmark of GE has given us great discipline and has allowed us to see things before others see them. It’s allowed us the chance to go after things like the Olympics and the NFL; to acquire Oxygen and the international channels that we did. The fact is GE invested more in NBC Universal in ’07 and ’08 than any of our peers did other than News Corp.’s acquisition of Dow Jones. So GE’s commitment to NBCU is clear … I hope we’re there for a long time. You know, nothing lasts forever, but I think NBCU has benefited greatly from being part of GE, and I hope that continues. And I believe it will.